PDF, 1.2 MB - Pfleiderer AG

consolidated financial statements notes pfleiderer ag 85
Deferred Taxes
Deferred tax assets and liabilities are set up for all temporary differences between the values
shown in the tax balance sheet and those in the consolidated balance sheet, as well as for tax
loss carryforwards (“temporary concept”). Tax rates are used which, under current legislation,
will apply in future when temporary differences are probably reversed. The effects of changes
in tax law on deferred taxes are charged to the consolidated statement of income in the accounting
period in which they occur. Deferred tax assets are only reported when it is probable
that the related tax advantages will be realized.
When estimating the realization of deferred tax assets the Company considers whether
the probability that they will be realized greater than 50 percent.
Comprehensive Income
SFAS No. 130 “Reporting Comprehensive Income” obliges the complying companies to show
comprehensive income and its components net income (after minority interests) and other
comprehensive income separately in the consolidated financial statements.
Other comprehensive income includes sales, expenses, profits and losses not shown
under net income (loss). Both other comprehensive income and comprehensive income are
shown in the statement of changes to equity.
Earnings and Diluted Earnings per Share
Earnings per share (EPS) were calculated in accordance with SFAS No. 128 “Earnings per
Share”. SFAS No. 128 lays down that EPS must be shown for all companies that have issued
shares. Normal EPS is the net profit (loss) divided by the weighted average of outstanding
shares. Common-stock equivalents used for purposes of stock option compensation can have
a dilutive effect. Where a dilutive effect occurs, diluted earnings per share must also be shown.
New Accounting Pronouncements
In June 2001, the FASB issued SFAS 143, “Accounting for Asset Retirement Obligations”.
This new statement regulates the accounting for and reporting of obligations resulting from
the retirement of property, plant and equipment and the associated retirement costs. The new
standard applies to legal obligations associated with the retirement of property, plant and
equipment that result from the acquisition, construction, development and/or the normal
operation of a long-lived asset. SFAS 143 requires that the fair value of a liability for an asset
retirement obligation be recognized in the period in which it is incurred if a reasonable estimate
of fair value can be made. The associated asset retirement costs are capitalized as part
of the carrying amount of the long-termed asset and subsequently depreciated over the asset’s
useful life. The liability is adjusted to its present value at the end of each reporting period, with
effect on results. Any positive or negative difference in its carrying value arising when the
liability is discharged is recorded with effect on results. SFAS 143 must be applied to fiscal
years beginning after June 15, 2002, but can be applied before this time. The Company will apply
SFAS No. 143 from January 1, 2003 onwards. The potential effects of applying SFAS 143
have not yet been fully calculated.